Dolla hunting cash to expand loan book and country locations

Microlender Dolla Financial Services approached investors again for fresh capital, having already run through the $1.2 billion raised less than a year ago, says CEO Kadeen Mairs.

This time, Dolla is seeking US$5 million, or around $750 million in local currency, from undisclosed American interests. Mairs would not say which institution, only that Dolla managed to secure the funds at four per cent interest.

“We’re not approaching the bond market this time, but rather to take a medium- to long-term loan facility,” he said, noting that he expected the lenders to finalise their decision by month-end.

The loan will be in US dollars.

Mairs says he is not worried about fluctuations in the Jamaican dollar versus the greenback since the foreign-currency market has been relatively stable.

“Even if it goes up a little bit, we’re enjoying a lower interest rate on the loan, so if there is any foreign currency risk it can be absorbed by the interest rate buffer,” he said.

“The money-lending business is a constant cycle of raising money to lend money since we’re not a deposit-taking institution like a bank,” Mairs argued.

“Raising money is going to be a part of the business model. We’ll have to do that every year. If we don’t, then our growth will stagnate.”

Over the span of a year, Dolla has grown its loan book from $750 million to $1.72 billion.

The company is one of the few microlenders that have so far received their licences from the Bank of Jamaica, BOJ, under new legislation that recently placed the previously laissez faire sector under the regulatory umbrella of the central bank.

The law now requires each entity to operate under licence. The BOJ last reported in November that it had over 100 applications in hand and at that time had licensed five firms. Dolla’s approval came after that.

Mairs says both Dequity Capital and FirstRock Private Equity, as investing partners in Dolla, would continue to lend money to support the growth of its loan book or raise the necessary capital on the microfinancing company’s behalf.

Dolla currently has 10 branches in Jamaica and one in Georgetown, the Guyana capital. By June 2023, Mairs said, a second Guyana branch will open in Berbice.

“Business has been profitable since last year, and we want that to continue. It will be looking to raise its own capital in that market soon to continue to grow its loan book,” Mairs said.

Mairs wants Dolla Guyana to eventually operate as a stand-alone subsidiary. The country operations there are led by Jamaican Aldain Tomlinson.

“This will allow it to raise capital on its own to grow its own loan portfolio and not depend totally on the parent company, Dolla Jamaica,” Mairs said.

As to the group operation, the company is still looking to buy another micro-lending business and is expecting to make progress on the transaction at mid-year.

“We’ve not come to any final agreement, however, information on that will be given to our regulators and the Jamaica Stock Exchange,” he said, adding that he expects the acquisition deal to be concluded by June.

Dolla had previously made an attempt at buying its larger rival, Access Financial, but was aggressively rebuffed. The company has never said definitively whether it has given up on the chase, but that ambition appears, at least, to have been put on hold while Dolla hunts for other prospects.

Dolla is also looking to expand to two other Caribbean countries, Barbados and St Lucia, but Mairs said it is still awaiting approval from the Bank of Jamaica to proceed.

“Each time we look to expand in another country, one requirement is that we submit a plan and get the blessing of our regulator. We’ve done that, and we’re waiting on the go-ahead to expand to the Eastern Caribbean,” he said.

Dolla, which listed on the junior market of the stock exchange last June, reported annual earnings of $280 million at year ending December 2022, more than doubling the $129 million profit outturn the previous year.

neville.graham@gleanerjm.com